Ligand Sells Promacta Assets and Royalty for $827 Million

Conference call with slides to be held today at 5:00 p.m. Eastern time

SAN DIEGO & NEW YORK--(BUSINESS WIRE)--
Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) and Royalty Pharma announce
the sale of Ligand’s Promacta®-related intellectual property
rights licensed to Novartis, including the royalty stream on worldwide
net sales of Promacta to Royalty Pharma for $827 million in cash.
Promacta (eltrombopag) is known as Revolade® outside the U.S.
and is marketed worldwide by Novartis. This transaction is expected to
close on Wednesday, March 6, 2019.

“After extensive consideration, we determined it is in the best interest
of Ligand stockholders to monetize our Promacta assets. We are very
proud of our discovery contribution to this billion-dollar molecule and
best-in-class medicine for a vital medical market. The product has been
a big part of our success, driving the company to profitability and
generating significant cash flows through the years,” said John Higgins,
Chief Executive Officer of Ligand. “We are pleased to work with Royalty
Pharma on this deal. They are the world’s largest royalty investor and
have extensive experience investing in royalty-bearing assets. We share
a common view with Royalty Pharma that owning royalties is a highly
efficient and effective way to participate in the potential of the
pharmaceutical industry.”

“In addition to receiving an attractive and substantial valuation for
the future royalties, this transaction allows Ligand to focus investment
of the cash proceeds into assets and companies that will drive financial
growth five, 10 years and beyond. This transaction doubles our
investable cash to over $1.4 billion while preserving what we view as
our most valuable assets: our portfolio of partnered programs and our
OmniAb technology platform. We have a promising horizon of
business-development opportunities, and remain committed to obtaining
potential royalties through internal development, acquisition and
technology out-license to drive revenue growth. We also remain committed
to implementing our investment strategy with relatively low and tightly
managed operating expenses in order to maximize cash-flow and profits
per share for all stockholders,” Higgins added.

“We are pleased to partner with Ligand in this important transaction, in
which Ligand has transformed an intangible asset into capital it can use
to drive future growth in its core business” said Pablo Legorreta,
Founder & CEO of Royalty Pharma. “Ligand’s contribution to the discovery
of Promacta is a testament to the ability of Ligand’s technology
platforms to produce innovative therapies with blockbuster potential. At
the same time, Royalty Pharma is pleased to expand its portfolio of
royalties on innovative blockbuster drugs by acquiring certain rights,
title and interest in the leading therapy for immune thrombocytopenia
and other serious bleeding disorders. This is truly a win-win
transaction for both Ligand and Royalty Pharma.”

Highlights of the transaction to monetize the Promacta royalty include:

Provides substantial cash payment for Ligand’s leading royalty asset.

Ligand’s 2019 revenues are now expected to be approximately $118
million and 2019 adjusted diluted EPS to be approximately $32.25,
compared to the previous guidance of $6.05.

Proceeds to be reinvested by Ligand primarily to 1) acquire assets
that can generate long-term revenue streams, fully-funded Shots on
Goal and technology platforms to drive future deal making and 2) share
repurchases to increase the per share profits and cash-flow for the
existing business.

Ligand will enter the second quarter of 2019 with highly-diversified
and high-growth revenue streams, more than 200 Shots on Goal fully
funded by partners, three major technology platforms to drive new
licensing and over $3.5 billion of potential contract payments with
existing partners.

At the close of the transaction, Ligand estimates it will have over
$1.4 billion of cash.

In addition, the long-term growth potential for the OmniAb platform is
accelerating, given R&D progress by partners and new licensing
transactions. As discussed during Ligand’s fourth quarter 2018 earnings
call, OmniAb holds potential to generate $500 million to $1 billion in
future annual royalty revenue.

Ligand has a substantial upcoming calendar of clinical, regulatory and
commercial events for leading partnered assets including VK-2809,
Sparsentan, ZULRESSO™, RVT-1502 and expanded clinical data for Kyprolis,
as well as Ligand’s internal pipeline including Captisol-enabled iohexol
and internal antibody-based programs.

Promacta Highlights

Launched in 2008, generated $291 million of royalties for Ligand over
the past 11 years.

Annual sales have increased at a 32% compound annual growth rate over
the past five years.

Worldwide patents expected to expire between 2021 and 2028.

Achieved and maintained a leadership position in a category that has
had multiple new products enter the market over past 12 months.

The sale of Ligand’s Promacta assets will be made pursuant to an asset
purchase agreement between the parties in which Royalty Pharma will
acquire the research, development and license agreement between Novartis
Pharma AG (as successor in interest to SmithKline Beecham Corporation)
and related assets from Ligand, and assume certain related liabilities.

2019 Financial Guidance

Ligand is providing updated guidance for 2019 with total revenues now
expected to be approximately $118 million, which includes royalties of
approximately $48 million, material sales of approximately $27 million
and license fees and milestones of approximately $43 million.

Ligand notes that with total revenues of $118 million, adjusted diluted
EPS would be approximately $32.25. This EPS estimate assumes a diluted
share count for the year of approximately 21.5 million.

This compares with previous guidance for 2019 total revenues to be
approximately $224 million, including royalties of approximately $154
million, material sales of approximately $27 million and license fees
and milestones of approximately $43 million. Previous guidance for
adjusted diluted EPS was approximately $6.05.

Ligand is also providing guidance for the first quarter of 2019 for
total revenues of at least $38 million, and adjusted diluted EPS of
approximately $30.00. First quarter revenue breakdown is projected to be
approximately $19 million in royalties, including $15 million of
Promacta royalties estimated for the first two months of 2019, $12
million in license fees and milestones and $7 million of material sales.
There is potential for approximately $5 million in additional royalties
and contract payments during the first quarter based on the timing of
milestones and sales levels for royalty-bearing assets.

Conference Call

A conference call and webcast with slides will be held today at 5:00
p.m. Eastern time (2:00 p.m. Pacific time), which will be hosted by
Ligand’s CEO John Higgins, President and COO Matt Foehr and CFO Matt
Korenberg. To participate please dial (833) 591-4752 from within the
U.S., or (720) 405-1612 from outside the U.S., using Conference ID
9786043. The slides as well as the webcast and an archive of the webcast
will be accessible through www.ligand.com.

Analyst Day Reminder

Ligand reminds investors of its upcoming Analyst Day on Tuesday, March
12, 2019 from 10:00 a.m. to 12:00 p.m. Eastern time (7:00 a.m. to 9:00
a.m. Pacific time) in New York City. For more information or to reserve
a seat, please contact Kasha Chen at kchen@lhai.com.

About Promacta

Eltrombopag, marketed as Promacta® in the U.S. and Revolade®
in countries outside the U.S., is approved in more than 90 countries
worldwide for the treatment of thrombocytopenia in adult patients with
chronic immune thrombocytopenic purpura (ITP) who have had an inadequate
response or are intolerant to other treatments. It is also approved for
the treatment of patients with severe aplastic anemia (SAA) as
first-line therapy in the U.S. (patients 2 years and older) and Japan,
and in many other countries for patients who are refractory to other
treatments. In more than 40 countries, Promacta/Revolade is indicate for
the treatment of thrombocytopenia in patients with chronic hepatitis C
to allow them to initiate and maintain interferon-based therapy.
Promacta/Revolade is approved in the U.S. and in the European Union for
the treatment of thrombocytopenia in pediatric patients 1 year and older
with chronic ITP who have had an insufficient response to
corticosteroids, immunoglobulins, or splenectomy. Promacta should only
be used in patients with ITP whose degree of thrombocytopenia and
clinical condition increase the risk for bleeding.

About Royalty Pharma

Founded in 1996, Royalty Pharma is the industry leader in acquiring
pharmaceutical royalties, with over $16 billion in royalty assets.
Royalty Pharma funds innovation in life sciences both directly and
indirectly: directly when it partners with life sciences companies to
co-develop and co-fund products in late-stage clinical trials, and
indirectly when it acquires existing royalty interests from the original
innovators (academic institutions, research hospitals, foundations and
inventors). The company’s portfolio includes royalty interests in over
40 approved products including AbbVie and J&J’s Imbruvica, Astellas and
Pfizer’s Xtandi, Biogen’s Tysabri, Gilead’s HIV franchise, Merck’s
Januvia, and Vertex’s cystic fibrosis franchise. Royalty Pharma is also
a leading investor in pre-approval royalties, having since 2011 invested
over $4 billion in royalties on pre-approval products and committed over
$900 million to direct R&D funding in exchange for royalties. More
information on Royalty Pharma is available at www.royaltypharma.com.

About Ligand Pharmaceuticals

Ligand is a biopharmaceutical company focused on developing or acquiring
technologies that help pharmaceutical companies discover and develop
medicines. Our business model creates value for stockholders by
providing a diversified portfolio of biotech and pharmaceutical product
revenue streams that are supported by an efficient and low corporate
cost structure. Our goal is to offer investors an opportunity to
participate in the promise of the biotech industry in a profitable,
diversified and lower-risk business than a typical biotech company. Our
business model is based on doing what we do best: drug discovery,
early-stage drug development, product reformulation and partnering. We
partner with other pharmaceutical companies to leverage what they do
best (late-stage development, regulatory management and
commercialization) to ultimately generate our revenue. Ligand’s Captisol®
platform technology is a patent-protected, chemically modified
cyclodextrin with a structure designed to optimize the solubility and
stability of drugs. OmniAb® is a patent-protected transgenic
animal platform used in the discovery of fully human mono-and bispecific
therapeutic antibodies. Ligand has established multiple alliances,
licenses and other business relationships with the world's leading
pharmaceutical companies including Novartis, Amgen, Merck, Pfizer,
Celgene, Gilead, Janssen, Baxter International and Eli Lilly.

Follow Ligand on Twitter @Ligand_LGND.

Adjusted Financial Measures

The Company reports adjusted net income per diluted share in addition
to, and not as a substitute for, or superior to, financial measures
calculated in accordance with GAAP. The Company’s financial measures
under GAAP include share-based compensation expense, amortization of
debt-related costs, amortization related to acquisitions and intangible
assets, changes in contingent liabilities, mark-to-market adjustments
for amounts relating to our equity investments in Viking Therapeutics
and Retrophin, acquisition and integration costs, unissued shares
relating to the Senior Convertible Notes and others that are listed in
the itemized reconciliations between GAAP and adjusted financial
measures included in our earnings release for the 2018 fiscal year.
However, other than with respect to total revenues, the Company only
provides guidance on an adjusted basis and does not provide
reconciliations of such forward-looking adjusted measures to GAAP due to
the inherent difficulty in forecasting and quantifying certain amounts
that are necessary for such reconciliation, including adjustments that
could be made for changes in contingent liabilities, changes in the
market value of our investments in Viking Therapeutics and Retrophin,
share-based compensation expense and effects of any discrete income tax
items. Management has excluded the effects of these items in its
adjusted measures to assist investors in analyzing and assessing the
Company’s past and future core operating performance. Additionally,
adjusted earnings per diluted share is a key component of the financial
metrics utilized by the Company’s board of directors to measure, in
part, management’s performance and determine significant elements of
management’s compensation.

Forward-Looking Statements

This news release contains forward-looking statements by Ligand that
involve risks and uncertainties and reflect Ligand's judgment as of the
date of this release. Words such as “plans,” “believes,” “expects,”
“anticipates,” and “will,” and similar expressions, are intended to
identify forward-looking statements. These forward-looking statements
include, without limitation, statements regarding: the expected closing
of the Promacta transaction and the timing thereof, Ligand’s expected
use of proceeds therefrom, including potential acquisitions, investments
and share repurchases, Ligand’s belief that Promacta is or will remain a
market leading medicine, the length of patent protection for Promacta,
Ligand’s belief regarding the diversified nature of its business,
Ligand’s future revenue, the growth of future royalty streams, future
P&L growth rates, and guidance regarding the full-year 2019 financial
results. Actual events or results may differ from Ligand's expectations
due to risks and uncertainties inherent in Ligand’s business, including,
without limitation: Ligand’s and Royalty Pharma’s ability to satisfy the
conditions to closing for the proposed transaction on the anticipated
timeline or at all; Ligand may not realize the full economic benefit
from the transaction, including as a result of indemnification claims
and the retention by Ligand of certain liabilities; market conditions,
including the volume and price of Ligand’s common stock; Ligand may not
receive expected revenue from royalties, Captisol material sales and
license fees and milestone revenue; Ligand and its partners may not be
able to timely or successfully advance any product(s) in its internal or
partnered pipeline; Ligand may not achieve its guidance for 2019; Ligand
may not be able to create future revenues and cash flows by developing
innovative therapeutics; results of any clinical study may not be
timely, favorable or confirmed by later studies; products under
development by Ligand or its partners may not receive regulatory
approval; there may not be a market for the product(s) even if
successfully developed and approved; Novartis, Amgen or Spectrum, or
other Ligand partners, may not execute on their sales and marketing
plans for marketed products for which Ligand has an economic interest;
Ligand or its partners may not be able to protect their intellectual
property and patents covering certain products and technologies may be
challenged or invalidated; Ligand's partners may terminate any of its
agreements or development or commercialization of any of its products;
Ligand may not generate expected revenues under its existing license
agreements and may experience significant costs as the result of
potential delays under its supply agreements; Ligand and its partners
may experience delays in the commencement, enrollment, completion or
analysis of clinical testing for its product candidates, or significant
issues regarding the adequacy of its clinical trial designs or the
execution of its clinical trials, which could result in increased costs
and delays, or limit Ligand's ability to obtain regulatory approval;
unexpected adverse side effects or inadequate therapeutic efficacy of
Ligand's product(s) could delay or prevent regulatory approval or
commercialization; Ligand may not be able to successfully implement its
strategic growth plan and continue the development of its proprietary
programs; and ongoing or future litigation could expose Ligand to
significant liabilities and have a material adverse effect on the
company. The failure to meet expectations with respect to any of the
foregoing matters may reduce Ligand's stock price. Additional
information concerning these and other risk factors affecting Ligand can
be found in prior press releases available at www.ligand.com
as well as in Ligand's public periodic filings with the Securities and
Exchange Commission available at www.sec.gov.
Ligand disclaims any intent or obligation to update these
forward-looking statements beyond the date of this release, including
the possibility of additional license fees and milestone revenues we may
receive. This caution is made under the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995.